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Good News For NES Customers, Rates Will Decrease In April

Last week a spokesperson for Nashville Electric Service announced that the TVA Fuel Cost Adjustment has dropped approximately 5% this quarter and from April through June, NES cutomeers will see an average savings of $4.00 to $8.00 on their monthly bill. Combined with the 6% decrease in January 2009, TVA has lowered the Fuel Cost Adjustment by 11% in the last six months. The decrease is the result of lower fuel and purchaseBy Betsy Thorped power costs.

The fuel cost adjustment is calculated by comparing the actual cost of fuel and purchased power with the projected costs the rates were based on. The difference is then multiplied by the kilowatt-hours of energy used to account for any change. The variable energy rate can fluctuate each quarter as many factors such as the weather, changes in the price of coal and natural gas, and unforeseen changes in the operations of TVA’s generating plants affect the price of purchased fuel and power. The varying nature of those factors make it difficult for the TVA to predict the amount of revenue required to cover the cost of producing power. By using the calculated Fuel Cost Adjustment they are able to avoid making permanent rate increases as the adjustment allows them to quickly match costs with revenue.